"The least expensive kilowatt, is the one not used."

- Jacob Goldman

Americans eat more chicken than any other country in world most of which
comes from the United States. The country has over 30,000 family owned poultry
farms and over 70,000 broiler houses1. In addition to complying with
food processing companies’ standards, chicken growing facilities must
consider yields per square foot and energy consumption. These energy intensive
facilities can profit from moving away from incandescent technology and
installing LED lighting in its place. This transition means energy cost savings
and a large EPAct tax incentive opportunity as well.

EPAct Tax Opportunities

Pursuant to Energy Policy Act (EPAct) Section 179D, buildings making
qualifying energy-reducing investments in their new or existing locations can
obtain immediate tax deductions of up to $1.80 per square foot2.

If the building project doesn't qualify for the maximum $1.80 per square
foot immediate tax deduction, there are tax deductions of up to $0.60 per
square foot for each of the three major building subsystems: lighting, HVAC
(heating, ventilating, and air conditioning), and the building envelope. The
building envelope is every item on the building’s exterior perimeter that
touches the outside world including roof, walls, insulation, doors, windows and
foundation.

** Estimates based on 2006 data extrapolated at the same percentage increase
as is expected in lbs. increase between 2006 and 2012 (3%). 3,4

LED Lighting

One of the greatest considerations when changing technologies within the
broiler growing industry is whether the growing cycle will be affected. This
question was posed and answered by a University of Arkansas field study which
pitted several lighting technologies against each other both in terms of energy
efficiency and broiler production1. The study was controlled so that some of
the houses kept their incandescent bulbs and some of the houses utilized newer
fluorescent and new LED lighting technology. The study enlisted the support of
both the growers and an anonymous chicken processing company; both were
characterized as eager participants.

The study concluded that long life, low wattage LED lighting is a viable
alternative for chicken growing facilities. This technology has proven to
support optimum yield performance of the birds and was harmless to the growing
cycle. In addition, the study facilities realized major energy cost savings
from the LED lighting. LED lighting lasts forty times longer than traditional
technologies and uses one-tenth the electricity that today's incandescent light
bulbs use. Along with energy costs reduction, LED lighting presents a
significant tax savings opportunity. LED projects usually qualify for
considerable EPAct tax deductions most times at the $1.20 to 1.80 per square
foot level5.

The square footage of the grower facilities included in the study and their
potential EPAct tax deductions are presented in the table below:

EPAct Potential Benefits in Chicken Growing Industry

Note: The above results are limited to those growers who participated in the
University of Arkansas study. 6

Environmental Responsibility

Conserving energy and protecting the environment is a good policy on its own
and one that attracts environmentally conscious customers. A growing number of
prominent companies are implementing supplier sustainability programs, which
are raising sustainability standards throughout the entire food supply chain.
Food processing suppliers selling to Wal-Mart7, a large chicken
purchaser, for instance, must respond to 15 sustainability questions,
concerning energy and climate, materials efficiency, nature and resources, and
people and community. Target, another large chicken purchaser, also has its own
sustainability program8.

These first tier suppliers are encouraging similar sustainability for lower
tier suppliers, which also must be ready to implement energy costs. Energy
efficiency measures, such as lighting and HVAC upgrades, represent major steps
towards a better environmental performance. EPAct tax deductions are available
to assist companies in this endeavor.

Conclusion

To both decrease operating costs and increase their supplier positions under
consumer sustainability programs, both growers and chicken processors can
benefit from LED lighting upgrades. Growers can increase profits by lowering
energy costs and processors can boost their supplier status with Wal-Mart,
Target, and other major chicken purchasers. Chicken farmers who are able to
change to more efficient LED technology will enjoy energy savings and a high
likelihood of receiving a $1.80 per sq. ft. tax deduction.